The Rosenbaum Law Firm P.C. Blog

OregonSaves was the first state-based auto-IRA program and has reached $200 million in assets after six years

Launched in July 2017, OregonSaves started with the largest employers and now covers those with four or fewer employees. Oregon is the first state program to roll out to businesses of this size. 118,000 employees from more than 21,000 employers are covered by the plan.

Based on the numbers, I’m not that impressed. It reinforces what I have said, these Auto-IRA programs are great at increasing retirement plan coverage, but I still think many employers will opt to start their own 401(k) plan or join a pooled employer plan, rather than join a state plan.

OneDigital announced that it had acquired StoneStreet Equity, a retirement plan consulting and wealth management firm in Armonk, New York, with $3.8 billion in assets under advisement.

StoneStreet was founded by Robert A. Goldstein and is currently led by principal and chief investment officer Spencer Goldstein and principal and managing director Heidi Sidley.

For those that remember my personal history, StoneStreet was the advisor that the human resources director of my old law firm, hired, based on a recommendation that I didn’t make, which was a humiliating experience. Solid firm, though.

Nevada is the latest state to provide retirement plan coverage for private-sector employees through an Auto IRA program if their employer do not.

The bill was signed by Gov. Joe Lombardo (R).

The law requires all private sector employers with an electronic payroll system in the State of Nevada to offer a retirement plan to their employees. The law ensures that any type of retirement plan, such as a 401(k) plan, satisfies the requirement. Otherwise, employers would have to participate in a state-facilitated IRA-based retirement program.

I don’t know if I will ever retire, I think retirement only quickens dementia.

25 percent of non-retired investors aged 55 to 65 are planning to retire later than they had expected, and another 15% don’t think they will ever retire, according to Nationwide’s eighth annual Advisor Authority survey.

This comes as no shock because of increased life expectancy, as well as the fear of dementia that I have.

My latest article for JDSupra.com can be found here.

Years ago, any volume submitter plan or non-standardized prototype plan would apply for its own determination letter from the Internal Revenue Service (IRS). Then one day, the IRS tried to cut back on their agent’s workload and said that line-by-line adopters of these types of plans didn’t need their own determination letter.

Just now, the IRS is telling us all that they are inundated by Voluntary Correction Program (VCP) applications. That is probably why they are expanding the Self-Correction Program. While the expansion of the SCP and the cut in VCP applications may affect my bottom line, there will be a cost for plan sponsors. The cost of that increased opportunities for self-correction will create larger penalties for those that don’t fix errors and let the IRS agent on an audit help fix things, with a larger hammer to penalize plan sponsors. I think the increase in Self Correction will also lead to programs from third-party administrators and ERISA attorneys like myself, to offer plan reviews, that might be a cost-effective tool to root out plan errors that can be corrected through SCP.

It looks like we may see a new fiduciary proposal this August, said the Department of Labor (DOL) in its Spring Regulatory Agenda. As Yogi Berra would say: “It’s de ja vu all over again.”

The DOL agenda includes a proposal that would amend the regulatory definition of a fiduciary, in an effort “to more appropriately define when persons who render investment advice for a fee to employee benefit plans and IRAs are fiduciaries within the meaning of section 3(21) of ERISA [Employee Retirement Income Security Act of 1974] and section 4975(e)(3) of the Internal Revenue Code.”

The amendment would also take into account practices of investment advisers, and the expectations of plan officials and participants, and IRA owners who receive investment advice.

The DOL noted that the Employee Benefits Security Administration (EBSA) will evaluate available prohibited transaction class exemptions and propose amendments or new exemptions to ensure consistent protection of retirement plans and IRAs.

When the Internal Revenue Code was amended in 2006 to add Automatic Enrollment with fiduciary protection, I was for it. If we could get participants to save passively, maybe they would decide to be active participants and increase their contributions.

According to a Vanguard survey released, participation rates in 401(k), or which Vanguard serves as record keeper have reached an all-time high of 83%. The survey showed that automatic enrollment allows easier chances for retirement savers. Nearly 58% of plans, and 76% of plans with at least 1,000 participants, have adopted this automatic enrollment.

The study said that nearly a quarter of participants saved at least 10% of their income for retirement and the average deferral rate hit a historic high of 7.4%.

Another BlackRock Target Date Fund case, that was alleging that plan sponsors “chased” low fees and disregarded poor performance has been thrown out.

These suits have also been filed on behalf of participants in the 401(k) plans of Citigroup Inc., Cisco, Genworth, Stanley Black & Decker Inc., Microsoft, Marsh & McLennan Cos., Advance Publications, and Wintrust Financial Corp.

The $1.5 billion Advance 401(k) Plan class action case is the latest loser in court. The lawsuit alleged that the BlackRock TDFs were significantly worse performing than many of the mutual fund alternatives offered by TDF providers.

Judge Analisa Torres of the U.S. District Court for the Southern District of New York threw out the case, claiming the plaintiff failed to support allegations in the case. Advance argued that the plaintiffs failed to offer any direct allegations of an imprudent fiduciary process. Torres also noted that the plaintiffs failed to contest Advance’s claim that the plaintiffs did not allege that the returns of the comparator TDFs or composite index are reasonable proxies for underperformance.

Registered Investment Advisor firm SageView Advisory Group sadd that it has acquired two of the founders and managing partners of San Diego-based Retirement Benefits Group (RBG.

The RBG team is a retirement plan consulting group with $5.2 billion in assets under advisement

RBG co-founders Tony Franchimone and Larry Deatherage will become managing directors at SageView Advisory Group.

California based SageView advises on more than 1,900 defined contribution, defined benefit and deferred compensation plans in addition to providing wealth management consulting services.